Correlation Between Nine Energy and LeaderSharesTM AlphaFactor

Can any of the company-specific risk be diversified away by investing in both Nine Energy and LeaderSharesTM AlphaFactor at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Nine Energy and LeaderSharesTM AlphaFactor into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nine Energy Service and LeaderSharesTM AlphaFactor Core, you can compare the effects of market volatilities on Nine Energy and LeaderSharesTM AlphaFactor and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Nine Energy with a short position of LeaderSharesTM AlphaFactor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nine Energy and LeaderSharesTM AlphaFactor.

Diversification Opportunities for Nine Energy and LeaderSharesTM AlphaFactor

0.49

Correlation Coefficient

Nine Energy  LeaderSharesTM AlphaFactor

Very weak diversification

The 3 months correlation between Nine and LeaderSharesTM is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Nine Energy Service and LeaderSharesTM AlphaFactor Cor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LeaderSharesTM AlphaFactor and Nine Energy is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Nine Energy Service are associated (or correlated) with LeaderSharesTM AlphaFactor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LeaderSharesTM AlphaFactor has no effect on the direction of Nine Energy i.e., Nine Energy and LeaderSharesTM AlphaFactor go up and down completely randomly.

Pair Corralation between Nine Energy and LeaderSharesTM AlphaFactor

Given the investment horizon of 90 days Nine Energy Service is expected to generate 8.56 times more return on investment than LeaderSharesTM AlphaFactor. However, Nine Energy is 8.56 times more volatile than LeaderSharesTM AlphaFactor Core. It trades about 0.13 of its potential returns per unit of risk. LeaderSharesTM AlphaFactor Core is currently generating about 0.22 per unit of risk. If you would invest  114.00  in Nine Energy Service on September 3, 2024 and sell it today you would earn a total of  61.00  from holding Nine Energy Service or generate 53.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Nine Energy Service  vs.  LeaderSharesTM AlphaFactor Cor

Nine Energy Service

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nine Energy Service are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Nine Energy exhibited solid returns over the last few months and may actually be approaching a breakup point.

LeaderSharesTM AlphaFactor

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in LeaderSharesTM AlphaFactor Core are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, LeaderSharesTM AlphaFactor may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Nine Energy and LeaderSharesTM AlphaFactor

The main advantage of trading using opposite Nine Energy and LeaderSharesTM AlphaFactor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nine Energy position performs unexpectedly, LeaderSharesTM AlphaFactor can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in LeaderSharesTM AlphaFactor will offset losses from the drop in LeaderSharesTM AlphaFactor's long position.

The idea behind Nine Energy Service and LeaderSharesTM AlphaFactor Core pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.